The undersigned organizations submit these comments regarding the rules recently adopted by the Securities and Exchange Commission (SEC) to implement Section 954 of the Dodd-Frank Act. We are concerned that issuers will be expected to comply with the new listing standards required by Section 954 much sooner than anticipated, and we respectfully request that the SEC allow issuers enough time to develop and adopt their policies and procedures related to executive compensation “clawbacks.”
The SEC issued final rules to implement Section 954 in October 2022.1 The rules stipulated that exchanges file their proposed listing standards with the SEC within 90 days, and that the new listing standards become effective by no later than one year following the publication of the final rules in the Federal Register. Pursuant to this deadline, the new listing standards must be effective by November 28, 2023. Companies then have 60 days after that date to adopt their clawback policies. The one-year implementation timetable struck a proper balance between ensuring the standards become effective within a reasonable timeframe, while also affording issuers the time necessary to develop their policies and procedures regarding clawbacks.